Picogna v. Board of Educ. of Tp. of Cherry Hill

February 22, 1996

JOSEPH LOUIS PICOGNA, PLAINTIFF-RESPONDENT,v.BOARD OF EDUCATION OF THE TOWNSHIP OF CHERRY HILL AND PHILLIP ESBRANDT, DEFENDANTS-APPELLANTS, AND BARBARA RICHTERMAN, ELEANOR STOFMAN, ROBERT FREEDMAN, JEROME HAYM, FAITH JEROME, JAMES MARINO, DAVID MOLOTSKY, MARIANNE RAPHAELY, PAT CARROLL AND WILLIAM MCCARGO, INDIVIDUALLY AND/OR AS AGENTS AND/OR EMPLOYEES OF THE BOARD OF EDUCATION OF THE TOWNSHIP OF CHERRY HILL JOINTLY, SEVERALLY, AND IN THE ALTERNATIVE, DEFENDANTS.

On certification to the Superior Court, Appellate Division.

The opinion of the Court was delivered by Coleman, J. Chief Justice Wilentz and Justices Handler, Pollock, O'hern, Garibaldi and Stein join in Justice Coleman's opinion.

The opinion of the court was delivered by: Coleman

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The issues raised on this appeal are: 1) whether a plaintiff who institutes litigation for breach of an employment contract is entitled to damages for litigation-induced stress; and 2) whether an assistant superintendent of schools who is wrongfully terminated during the third year of a three-year employment contract acquired tenure.

Joseph Picogna was employed under a written contract with the Cherry Hill Board of Education (Board) as Assistant Superintendent for Business and Board Secretary for a three-year period beginning July 1, 1985, and ending June 30, 1988. The contract provided, among other things, that Picogna could be terminated for cause and that the parties, sixty days prior to the termination of the contract period, could give written notice of the intention not to renew the employment relationship.

In 1986, Philip Esbrandt became Superintendent of Schools. Initially, Esbrandt evaluated Picogna's performance favorably, but the relationship between the two men quickly fell apart. Esbrandt perceived that Picogna was attempting to interfere with his work and embarrass him both professionally and personally. Therefore, Esbrandt set out to establish a record that would support a recommendation not to renew Picogna's contract, and ultimately, support the recommendation that the existing contract be terminated. To accomplish that goal, Esbrandt made false accusations against Picogna, charging him with various acts of misconduct, including theft, conspiracy, and improper expenditure of tax dollars. Esbrandt also accused Picogna of covering up facts concerning a fatal school bus accident. Based on Esbrandt's allegations and recommendation, the Board adopted a resolution ratifying the termination of Picogna's contract as of April 29, 1988, two months prior to the expiration date of his contract.

On July 6, 1988, Picogna sued Esbrandt, the Board, and the individual members of the Board for breach of contract, denial of tenure, deprivation of due process, violation of the Conscientious Employee Protection Act (CEPA), and tortious interference with his contract. Picogna sought reinstatement, an injunction restraining the continued violation of CEPA, compensatory and punitive damages, attorneys fees, and costs.

On pre-trial motion of the Board and Esbrandt, the trial court dismissed all claims against the Board except the breach-of-contract claim, finding that Picogna had failed to file a notice of claim required by the Tort Claims Act. The trial court also dismissed Picogna's claim of tenure denial.

At the Conclusion of the bench trial, the Judge dismissed all claims against the individual Board members, finding that they acted in good-faith reliance on Esbrandt's evaluations when they voted to terminate Picogna's contract. The court also found no CEPA violation. However, the court did find that the Board had terminated Picogna's contract without cause; that Esbrandt had tortiously interfered with the contract; and that Esbrandt, acting as agent, servant, and employee of the Board, acted intentionally and maliciously to injure Picogna. The court ordered compensatory damages against the Board and Esbrandt as follows: economic damages - $750,000; and emotional distress damages - $560,000, which included recovery for litigation-induced stress. The court also assessed $50,000 in punitive damages against Esbrandt. In ascertaining the amount of economic damages, the trial court considered that Picogna would have received tenure if it had not been for the actions of the Board and Esbrandt. The court's award represented what Picogna would have earned until retirement, reduced by certain variables, such as death and early retirement.

The Board appealed. The Appellate Division affirmed the trial court's finding of liability as well as the punitive damage and emotional distress damage awards. The court declined to discuss litigation-induced stress as a component of damages. A majority of the panel reversed and remanded the award of economic damages, concluding that the calculation of damages over Picogna's projected work-life based on anticipated tenure was improper and that the lost wages awarded should have been based on net income. One member of the panel Dissented, concluding that Picogna was wrongfully deprived of tenure and that the trial court's calculation of economic damages was proper.

The Supreme Court granted the Board's petition for certification to address the appropriateness of the award of litigation-induced stress damages. Picogna did not cross-appeal based on the Dissent in the Appellate Division, nevertheless, the Court addresses the issue of whether Picogna obtained tenure because of its importance to school districts statewide.

HELD: Litigation-induced stress is not recoverable as a separate component of emotional distress damages. In addition, an assistant superintendent of schools does not acquire tenure under N.J.S.A. 18A:28-5(a) after working in a school district for three consecutive calendar years unless he or she is reemployed by that district for at least one day in a fourth year.

1. Absent a court rule or an express statutory provision, a party may not recover litigation expenses in an action for damages. Because stress and anxiety normally go hand in hand with the litigation process, the majority of courts addressing litigation-induced stress have treated it as a non-compensable component of damages, irrespective of whose actions necessitate the litigation. Thus, Picogna may not recover for litigation-induced distress as a separate component of damages. Because the emotional-distress-damage award does not reflect the amount intended to compensate Picogna for litigation-induced stress, the entire award must be vacated and recalculated on remand. (pp. 6-11)

2. Picogna was terminated without cause before serving the requisite three years mandated by statute. Therefore, he did not acquire tenure status since that status only arises on compliance with the conditions set forth in the statute. Breach of a contract covering a full probationary period of employment that may have resulted in tenure had no breach occurred does not confer tenure in the absence of continued employment after service of the requisite number of consecutive probationary years in the same district. No matter how likely it is that Picogna would have obtained tenure, wrongful termination that does not violate State or federal anti-discrimination laws will not result in tenure. Further, the Board's contractual right not to renew the employment relationship on sixty-days notice is compelling evidence that the parties did not intend to confer tenure either on entry into the contract or after substantial performance of the contract. (pp. 11-15)

3. Although not discussed by the Appellate Division, Esbrandt's damages for tortious interference may differ from the Board's breach of contract damages. If that issue is raised on remand, or if Picogna seeks to impose greater economic damages on Esbrandt than those imposed on the Board, the trial court must decide whether a conflict of interest exists in having the same attorney represent both defendants. In addition, while the Court offers no precise limit for what amounts to a reasonable time period, it was a mistaken exercise of discretion under the circumstances of this case to award damages for the balance of Picogna's expected work life. (pp. 15-17)

4. Because punitive damages are intimately related to the economic and emotional distress damages, the punitive damage award must also be vacated and redetermined. (pp. 17-18)

That portion of the judgment of the Appellate Division in respect of the emotional distress damage award is REVERSED, the punitive damage award is VACATED and the matter is REMANDED to the Law Division for a new trial on damages only.

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